Not long after partners Stephen Schultz and Timothy Burgess
purchased export credit insurance to protect their electronics
distribution business, they had to collect on it-to the tune of
more than $250,000. A bankrupt subsidiary of a German company with
whom the partners had been doing business was unable to pay their
Leominster, Massachusetts, company, Kerotec Inc. But thanks to the
new insurance policy, the partners got paid anyway.

In the past, if you wanted to sell to foreign customers, you had
limited payment options: open credit terms (risky for the seller
unless a long-standing business relationship existed), cash in
advance (this is rare), or a letter of credit. Now, with export
credit insurance, there's another option to protect the seller.
According to Joe Grimes of American Credit Indemnity (ACI), a
Baltimore-based subsidiary of Dun & Bradstreet, export credit
insurance protects companies against nonpayment, slow payment and
insolvency.

This can come in handy if you're trying your hand at
exporting for the first time when you may be more vulnerable to
payment problems. Grimes says ACI's export credit insurance is
especially helpful to small companies because it frees them from
the responsibility of collecting credit information on overseas
buyers, as well as from much of the responsibility of managing
receivables.

Kerotec, which has clients in South America and Europe, uses
export credit insurance even after establishing a solid working
relationship with customers because insurance allows the company to
obtain financing on its international receivables. "Basically,
by having this insurance, we know what our maximum [loss] would be
[before the insurance takes effect]," says Schultz, who
believes small businesses that don't purchase export credit
insurance are asking for trouble: "For a small company to lose
half a million dollars would hurt."

Common Ground

If you're involved in a trade dispute, your remedies are
few. Lawsuits are expensive, and in recent years, arbitration has
become almost as costly. That's why mediation is fast becoming
the method of choice to resolve international business
disputes.

To help businesses settle trade tiffs, the Greater Dallas
Chamber of Commerce and the Dallas Bar Association got together to
form the first-ever International Mediation Center, which opened
earlier this year.

"Mediation is becoming extremely popular throughout this
country," says Sid Stahl, a mediator in private practice and a
member of the center's board of directors. It helps that NAFTA
encourages mediation of business and commercial disputes.

Entrepreneurial disagreements often go unresolved, Stahl says,
because agreeing on a settlement is so difficult, particularly when
the parties are from different countries. To make things easier,
the International Mediation Center handles all the arrangements for
a face-to-face meeting, which Stahl believes is the best way to
resolve a dispute. The meeting can be held either at the Dallas
site or at a location convenient to both parties.

Stahl says small-business owners who use the center's
services have the most to gain-more than owners of medium-sized or
large companies. "Small businesses will reap a larger
benefit," he explains, "because they need to get disputes
resolved sooner and can least afford the expense of
litigation."

State Of The Union

The United States is no stranger to exporting, but some states
do more to boost the nation's export figures than others.
According to the U.S. Department of Commerce, the top 10 exporting
states in 1994 were:

1. California

2. Texas

3. New York

4. Michigan

5. Washington

6. Illinois

7. Ohio

8. New Jersey

9. Florida

10. Pennsylvania

What clinched the No. 1 spot for California? "It's
tempting to say the reason is its geoeconomic location, but
California [businesses] make very competitive products," says
Dan McLaughlin, deputy assistant secretary with the U.S.
International Trade Administration. McLaughlin lists environmental
technology, high tech, engineering services, entertainment and
health services as California's most noteworthy contributions
to exporting.